For probably the first time in corporate India, the accounts of three consecutive financial years of a company were put to poll at an annual general meeting.
RPG Group company CESC placed the revised accounts for the years 2000-01 and 2001-02 for shareholders' approval along with the accounts for the year 2002-03 at its 25th annual general meeting on Friday. Minority shareholders forced all three financial statements to be put to poll at the stormy, four-hour AGM.
CESC had to revise its accounts because of the Supreme Court ruling revising the tariff structure for the three years. CESC had challenged the award before the court. The company had also adjourned the AGM for 2001-02, as it was unable to prepare the accounts for the year 2001-02, pending the court's judgment.
Further, all five resolutions, including infusion of funds by the promoters into the company as part of the corporate debt restructuring (CDR) scheme, was also put to poll by shareholders. The result of the poll will be announced on September 22.
The poll issue overshadowed two positive developments in CESC. First, the RPG group had already pumped in Rs 40 crore (Rs 400 million) as part of the CDR scheme requiring the promoters to infuse Rs 50 crore (Rs 500 million) fresh funds.
While Rs 16 crore (Rs 160 million) will be brought in through an issue of 33 lakh (3.3 million) equity shares of Rs 49.7 each to RPG group companies Hilltop Holdings India, Jubilee Investments & Industries and Adapt Investment Ltd, the promoters also pumped in Rs 24 crore (Rs 240 million) as unsecured loans, which will ultimately be converted into equity shares at a later date, possibly next year. The balance Rs 10 crore (Rs 100 million) will be brought in by September, CESC officials said.
In a parallel development, Sanjiv Goenka, vice-chairman, CESC, said it would be building a 250 mw power plant, the funding and location of which would be finalised in the next two months. "We are at present evaluating various options including the abandoned site at Balagarh and vacant land besides its existing plant at New Cossipore," he explained.
A mixture of loans from financial institutions, internal accruals and proceeds of sale of non-performing assets would be used to fund the power plant. CESC will sell the antiquated power plant and machinery at Mulajore power plant after its closure in December.
Goenka said that was one of the options the company was considering to fund the Rs 1000 crore (Rs 10 billion) project.
Existing lenders from financial institutions however said CESC was yet to approach them with a formal proposal. "Now that the CDR scheme is in place CESC will definitely have to go in for increased generation capacity to stay in competition. But we are yet to consider the project proposal," he added.
